NEW YORK 
Nordstrom Inc. is reporting that its first-quarter profit rose a slim 2.7 percent, even though its sales soared almost 14 percent, as the department store invested in free shipping and other initiatives to attract more shoppers.

The earnings fell short of Wall Street expectations, and shares of the upscale department store chain fell more than 5 percent in after-hours trading following the release of the report Thursday evening.

The Seattle-based company said its net income was $149 million, or 70 cents per share, for the three months that ended April 28. That compares with $145 million, or 65 cents per share, a year earlier.

Analysts were expecting 75 cents per share, according to FactSet.

Nordstrom's net sales rose to $2.54 billion, just shy of analysts' average forecast for $2.55 billion.

Revenue at Nordstrom stores open at least a year climbed 8.5 percent from a year earlier. That comparison is a considered a key indicator of a retailer's health because it's unaffected by sales at stores that recently opened or closed.

Sales have rebounded since late 2009 for Nordstrom and many other luxury retailers as well-heeled shoppers have gotten comfortable splurging again, despite the stock market's vagaries.

But Nordstrom also is investing in improving its customers' experience, and that's squeezing its profit margin. Last September, it started offering free shipping on all online purchases with no minimum dollar amount. Previously, customers had to spend at least $200 to qualify. Return shipping is free now too.

The company also is fusing its online and in-store inventory systems so shoppers can find out online what's in stock at any given store in the chain. It also has beefed up its online offerings and now provides free Wi-Fi access in all full-line department stores.

These changes, particularly the free shipping, helped Nordstrom's online sales rise 44.2 percent for the quarter. But they also eroded its gross profit as a percentage of total sales.

The company maintained its full-year forecast. It calls for earnings of $3.30 to $3.45 per share, while analysts on average were expecting $3.49 per share.

Nordstrom's shares fell $2.83, or 5.3 percent, to $50.70 after hours. They ended regular trading down 39 cents at $53.53.